Citation: 2013 TCC 288
Date: 20130916
Docket: 2013-1708(IT)APP
BETWEEN:
JILL K. REYNOLDS,
applicant,
and
HER MAJESTY THE QUEEN,
respondent.
REASONS FOR JUDGMENT
Jorré J.
Introduction
[1]
Jill Reynolds, the applicant,
seeks to be recognized as the
eligible parent of two children, A and T, for the purposes of the Canada Child
Tax Benefit. Her time extension application
to file an objection ultimately turns on the following provision:
. . . [the provisions of the Income Tax Act
relating to returns, assessments, objections, appeals and time extensions] . . .
apply, with any modifications that the circumstances require, . . .
to a determination or redetermination of . . . [the child tax
benefits to which an individual is entitled] . . .
[Emphasis added.]
and on the question: what exactly are the modifications required
by the circumstances?
[2]
The time extension
application before me relates to A and T and the 2008 and 2009 base years.
[3]
I want to take this
opportunity to thank counsel for the respondent for the documents which the
respondent put in evidence; without those documents I would not have been able
to understand what happened.
[4]
The respondent takes
the position that the application should be dismissed because it has been made
beyond the period during which one may make an application to extend the time.
[5]
For the reasons that follow, the
application will be dismissed because it is not necessary.
[6]
In these reasons I shall refer to
the Canada Child Tax Benefit as the Child Benefit, the Income Tax Act as
the Act and the Canada Revenue Agency as the Agency.
The Facts
[7]
The applicant first applied for the Child Benefit with respect
to two children, D and E, and had been recognized as the eligible
parent of those two children.
[8]
With respect to the 2008 base
year, the redetermination was issued on November 20, 2009. It states that
a review of the entitlement was made based on a change to the eligible children
and that it was accepted that the applicant was now eligible for D. The notice
also indicated that the applicant was eligible for E.
[9]
Subsequently, a review of the applicant’s
Child Benefit occurred. The applicant learned of this in a letter from the
Agency dated June 27, 2011.
[10]
As a result of this review, the
redetermination dated August 19, 2011 was issued with respect to the applicant’s
2009 base year. The applicant’s entitlement was reviewed with respect to
marital status and the applicant was determined to be married or living
common-law with a resulting reduction of benefits. Apparently the applicant was
asked to repay benefits. This redetermination was based on D and E being
eligible children.
[11]
Subsequently, the applicant filed
an application for the Child Benefit with respect to two additional children, A
and T. The application was received by the Agency on October 6, 2011.
[12]
The Minister responded to the
October 6, 2011 application by a letter dated November 23, 2011, Exhibit R-2.
[13]
The applicant then filed a notice
of objection with the Agency much later; it was received on January 29, 2013.
[14]
By letter dated March
14, 2013, the Agency granted an extension for the 2010 base year and concluded
that the objection was on time for the 2011 base year. With respect to the 2008
and 2009 base years, the letter advised that the Agency had concluded that the
extension request was too late for an extension to be granted because the last
day for making the request was May 2, 2011, for 2008, and November 19, 2012,
for 2009.
[15]
The applicant filed a
time extension application with this Court on May 1, 2013.
Analysis
[16]
The Child Benefit is
contained in sections 122.6 to 122.64 of the Act.
[17]
Pursuant to subsection
122.62(1) of the Act:
. . . a person may be considered to be an
eligible individual in respect of a particular qualified dependant at the
beginning of a month only if the person has, no later than 11 months after
the end of the month, filed with the Minister a notice in prescribed form
. . .
[18]
In other words, one
must apply for the Child Benefit. The benefit can only be paid in respect of
months that are not earlier than the eleventh month prior to the month in which
the application is made. For example, if an application is made in December
2012 and all other eligibility criteria are met, then a benefit may be paid for
January 2012 and subsequent months, but no benefit may be paid for December
2011 and prior months.
[19]
The general
administrative provisions of the Act are made applicable to the Child
Benefit by subsection 152(1.2).
[20]
For the purposes of
this appeal the relevant portions of subsection 152(1.2) are:
. . . this Division and Division J,
as they relate to an assessment or a reassessment . . . apply, with
any modifications that the circumstances require, . . . to a
determination or redetermination of . . . an amount deemed under
section 122.61 to be an overpayment on account of a taxpayer’s liability under
this Part . . .
[Emphasis added.]
“This Division and Division J” are the administrative provisions
dealing with, among other things, returns, assessments, objections and time
extensions. The deemed overpayment under section 122.61 is the amount of the Child
Benefit.
[21]
This provision may appear
straightforward on its face; however, it is in fact not so easy to apply.
[22]
The Agency’s position is that the applicant had 90 days from the redeterminations
of November 20, 2009 and August 19, 2011, respectively, within which to file objections.
[23]
The Agency further submits that,
pursuant to paragraph 166.2(5)(a) of the Act, I cannot make an
order extending the time because the applicant failed to make a time extension
request to the Minister “within one year
after the expiration of the time otherwise limited by this Act for serving a
notice of objection or making a request”. In other words, the Agency submits
that the application is out of time because it is beyond 90 days plus one year
from the redeterminations of November 20,
2009 and August 19, 2011, respectively.
[24]
There is no question
that the application is more than 90 days plus one year after those two dates.
If the Agency’s analysis is correct, I should dismiss the appeal.
Is the Application of October 6, 2011 an Objection?
[25]
However, this analysis assumes
that I should consider that the application for the Child
Benefit for A and T received by the Agency on October 6, 2011 was, in fact,
an objection to the redeterminations of November 20, 2009 and August 19, 2011.
[26]
The analysis also, in effect,
assumes that an application should be treated in respect of a base year much in
the same way as a tax return is treated with respect to a tax year.
Specifically, once a tax year has been assessed, absent a timely objection,
there is, in general, no right for a taxpayer to have a tax year reopened.
[27]
It is useful to consider in broad
terms the scheme of the Child Benefit contained in the Act.
[28]
In paying a benefit for a month,
the Agency must first determine if an individual has an eligible child, or
eligible children, for that month.
[29]
Secondly, the Agency must
determine the amount to be paid for the month. This is a function not only of
the number of children but also of family income.
[30]
Because it would be
impractical to use current family income on an ongoing basis, the scheme uses
past family income based on prior tax years. This is where the notion of base
taxation year comes in.
[31]
The base year is used
for the calculation of family income for the second half of the following year
and the first half of the second year after the base year, what one could refer
to as the “benefit period”. Thus, family income in the 2010 base year, the 2010
calendar year, will be used in the computation of benefits for the benefit
period comprising the months of July 2011 to June 2012.
[32]
Typically, tax returns
are filed before April 30th. Where an application has already been made
for a Child Benefit, the Agency will by mid‑year have both the
information from the application for the Child Benefit enabling it to determine
eligibility and the information from the parents’ tax returns allowing it to
determine family income for the purpose of establishing the amount of the Child
Benefit.
[33]
For example, if the
Agency has previously accepted that a parent has an eligible child, the Agency
will typically have received the family income tax returns for 2010 before June
2011 and, soon after receipt of the returns, it will be able to issue a
determination of the amount of the Child Benefit payable for the months
starting in July 2011 and ending in June 2012.
[34]
Let us suppose that,
in the example, the determination was issued in mid‑June 2011.
[35]
Let us suppose, as
well, that the parent in the example has a second child born on November 15,
2011 and files an application
in December 2011 with respect to the new child.
[36]
If I understand the
respondent’s approach correctly, this would mean that in the example, insofar
as receiving any Child Benefits for the benefit period from the birth of the
child in November 2011 until June 2012, the application filed in December 2011
would be an objection that was filed late because the application related to
the 2010 base year which had already been the subject of a determination more
than 90 days earlier.
[37]
Thus, if this were correct
we would have the surprising result that a parent of a second child born in
November who applied for the Child Benefit a month after birth would need to
apply for a time extension even though the application was within the period
set out in subsection 122.62(1) of the Act.
[38]
That is not the way in
which the Act works.
[39]
Child Benefit
applications are applications with respect to particular children.
[40]
Because an
individual’s eligible children may vary after an application for the Child
Benefit is made, a subsequent application that includes a newly born child or
which alleges a subsequent change in the facts regarding custody or care of a
child cannot be part of a determination based on the earlier application.
[41]
As a result, one of
the “modifications that the circumstances require” is that a subsequent Child Benefit
application cannot be considered to be the equivalent of seeking to file an
amended income tax return for a year that has already been assessed. In the
context of the Child Benefit, the obligation of the Minister to assess a return
in section 152 must be understood as an obligation to determine eligibility in
respect of a child whenever an application for the Child
Benefit is made.
[42]
Indeed, the Agency’s letter of
November 23, 2011 says that, where circumstances change and someone
subsequently meets the requirements for eligibility, they have to submit a new
application. This is implicit recognition that the Agency has to make a
determination when a new application alleges a factual change with regard to an
eligible child.
[43]
I note that Parliament
has set a clear and limited deadline for claiming the Child Benefit given that
no benefit can be paid for any month earlier than the eleventh month prior to
the month in which the application is made.
[44]
In this appeal, the redeterminations of
November 20, 2009 and August 19, 2011
with respect to the 2008 and 2009 base years are redeterminations of both the
eligibility of D and E and of the amount of the benefit payable for the
benefit periods starting in July 2009 and ending in June 2010 and starting in
July 2010 and ending in June 2011, respectively.
[45]
Those two redeterminations cannot
be viewed as determinations of the eligibility for A and T, children who were not at all under consideration when the redeterminations
were made.
[46]
They were based on applications
in respect of D and E made some time before November
20, 2009
well before the application was received by the Agency on October 6, 2011 in
respect of children A and T.
[47]
Thus the redetermination
of, for example, August 19, 2011 of the 2009 base year is not a definitive redetermination
of the Child Benefit payable for the period of July 2010 to June 2011 where
there are changes in the children in respect of which a person is eligible
subsequent to the time of the previous application in respect of any children.
[48]
Accordingly, I am
satisfied that the application for a
Child Benefit in respect of A and T, in respect of which the applicant had not
previously made an application, received by the Agency on October 6, 2011 was
not an objection and that the Agency had an obligation to make a determination
in respect to it.
Conclusion
[49]
Did the Agency make a
determination? The respondent took the position that the letter dated November 23, 2011 was not a determination.
[50]
While there are some elements of
the letter that arguably suggest a determination, overall, I agree with the respondent.
I note the absence of any directions as to how to file a notice of objection,
something one would expect if this were a determination.
[51]
The Agency has not yet dealt with
the application dated October 6, 2011 for the Child Benefit in respect of A and
T. The Agency has an obligation to do so.
[52]
As a consequence the
time to object has not yet started.
[53]
Accordingly the time extension
application is dismissed, not because it is out of time, but because it is
unnecessary.
[54]
I note that, because the
application was made in October 2011, if it turns out that the applicant were
eligible in respect of A and T, such eligibility could not be for months prior
to November 2010.
Signed at Ottawa, Ontario, this 16th day of
September 2013.
“Gaston Jorré”
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